DGXX — Q2 2026 Financial Report Analysis

Digi Power X, a former Bitcoin miner turning its power plants and sites into AI data centers, reported second-quarter 2026 revenue of $6.6 million, down 18.3% from $8.1 million a year earlier, and a net loss of $14.4 million, wider than the $9.7 million loss in Q2 2025. The quarter is a transition snapshot: legacy colocation and mining revenue shrank as one hosting site was rebuilt for AI, and the first AI revenue ($1.1 million from renting out NVIDIA GPUs) arrived for only about five weeks. The headline the company leads with, "positive Adjusted EBITDA of $3.3 million", depends on a $7.7 million non-cash currency gain; without it the business lost money even on management's own adjusted measure.

At a glance

• $1.1 million of GPU rental revenue — the first AI compute revenue, from about five weeks of a 24-month, ~$19.6 million contract with SubQ AI. It is 16% of the quarter's revenue.
• $7.7 million foreign-exchange gain — an accounting gain on intercompany balances, not cash. It is larger than the whole $3.3 million "Adjusted EBITDA" the company reported, and it is not removed from that figure.
• Weighted share count up 133% (36.6 million to 85.5 million) — the reason loss per share improved to -$0.17 from -$0.26 while the dollar loss grew 48%. Equity sales funded almost all of the $96.3 million spent on equipment and deposits in the first half.

The numbers

Operating margin is operating loss as a share of revenue: how much the company lost running the business for each dollar of sales, before interest, warrant revaluation and tax. Here it includes the $7.7 million FX gain, which the company books inside operating expenses; without it the operating loss would be about $17.9 million.

Where revenue went

• Colocation fell 23.6% to $3.4 million. Colocation means renting space and power in its facilities to other companies' machines (historically Bitcoin miners). The 10-Q attributes the decline to "the Corporation's transition to building out AI-driven infrastructure during the quarter in one of its previous hosting locations" — a site was taken offline from paying hosting clients to be converted. The segment table shows this business also got less profitable: colocation cost of revenue rose to $4.69 million from $1.60 million, so the segment went from $2.9 million of EBITDA a year ago to a $3.9 million loss.
• Energy sales fell 12.2% to $2.0 million, which the filing ties to selling less of the New York plant's power to the grid this quarter. Over the half-year, energy sales actually rose 21% to $6.9 million, so this is quarter-to-quarter timing rather than a trend.
• Bitcoin mining is nearly gone: about 3 bitcoin mined versus 14, at an average price of $71,648 versus $98,697. The company is deliberately winding it down. It still holds about 217 bitcoin and 1,017 ether, worth $14.3 million at quarter-end — and the fall in crypto prices cost it a $2.8 million revaluation loss in the quarter.
• GPU rental added $1.1 million. Since May 15, 2026, Digi Power X has rented a cluster of NVIDIA B200/B300 GPUs "bare metal" (the customer gets the whole machine, with no shared software layer) to SubQ AI through its NeoCloudz platform.

Costs: depreciation and stock pay drove the loss

Depreciation and amortization more than doubled to $4.1 million from $1.6 million, because, per the 10-Q, the company "placed into service approximately $50 million of assets related to its Tier III AI Data Center." That pushed the gross result to a $5.5 million loss. General and administrative expenses rose to $9.5 million from $3.9 million; most of the increase was share-based compensation ($5.75 million vs $1.89 million, from vested options and RSUs), with the rest from officer performance bonuses and higher marketing, legal and consulting fees. Below the operating line, a $5.0 million loss on revaluing warrants (rights held by investors to buy shares, marked to market as the share price moves) outweighed $0.8 million of interest income on the cash pile.

What the headline numbers hide

• The "positive Adjusted EBITDA" rests on a currency gain. The press release builds the $3.3 million figure as: net loss -$14.4M, plus depreciation $4.1M, plus stock compensation $5.8M, plus crypto revaluation loss $2.8M, plus warrant loss $5.0M. The $7.7 million FX gain stays in. The 10-Q describes that gain as "related to currency exchange fluctuations on the intercompany balances" — the parent reports in Canadian-dollar terms internally, and a roughly equal $7.7 million translation loss sits in other comprehensive income below net loss. Strip the gain out and Adjusted EBITDA would be roughly -$4.4 million. The company's own segment table, which management says it uses to run the business, shows total EBITDA of -$11.1 million for the quarter.
• Cash burn vs. the loss. Operating cash flow for the first half was -$10.6 million against a net loss of $19.0 million — better than the loss because stock pay ($7.1M), warrant losses ($4.3M) and depreciation ($5.5M) are non-cash, partly offset by the $10.7M non-cash FX gain. But that is still a business consuming cash before any investment.
• Funding comes from shareholders. First-half capital spending and equipment deposits were $96.3 million; new share sales raised $159.5 million net. Since the at-the-market program began in May 2025, the company has sold 52.0 million shares for $254.8 million gross at an average $4.90. Shares outstanding went from 69.4 million at December 31 to 98.5 million at June 30.
• EPS improvement is entirely dilution. The dollar loss grew 48%, but it was spread over 2.3 times as many shares. Nothing operational improved per share.
• The deposits line ballooned. Long-term "amounts receivable and other assets" rose to $54.3 million from $13.7 million, which tracks the press release's "approximately $110 million of year-to-date capital investment and equipment deposits" — money already paid for equipment not yet earning revenue.
• "$142.4 million of cash" in the press release includes crypto. The balance sheet shows $128.1 million of cash and equivalents; adding $14.3 million of bitcoin and ether gets to $142.4 million. The company has no debt.
• A small internal inconsistency: the 10-Q's eight-quarter table lists Q2 2025's net loss as $10.39 million (-$0.29/share), while the income statement shows $9.70 million (-$0.26). We use the income statement figures.
• US Data Centers Inc. left the consolidation. Outside investors put $3.15 million into this modular-data-center subsidiary, cutting Digi Power X's stake to about 48%, so it is now a $3.6 million equity-method investment rather than consolidated. No gain was recorded.

Takeaway: The AI business has started, but on a tiny scale: $1.1 million of GPU revenue against $14.4 million of net loss and a $96 million first-half spending bill paid for with new shares. The real test is the ~$1.1 billion, 10-year Cerebras colocation contract in Alabama, which earns nothing until Phase 1 is handed over in December 2026 — and the "positive Adjusted EBITDA" headline should not be read as evidence the existing business already covers its costs.

What comes next

Management's outlook:

• Alabama (Columbiana) for Cerebras: Phase 1 (15 MW of IT load) targeted for December 15, 2026; Phase 2 (another 25 MW, 40 MW total) by the end of Q1 2027. The 10-Q states the Phase 2 capacity "is conditioned on the Corporation securing adequate financing." Management says it is in advanced talks on project debt and has engaged Goldman Sachs to help syndicate it. The contract is worth about $1.1 billion over a 10-year initial term, and about $2.5 billion if Cerebras takes a seven-year extension.
• Revenue targets: Q3 2026 revenue "expected to increase significantly" versus Q2's $6.6 million; about $140 million of annualized contracted revenue in 2027; and a $250–300 million annualized run-rate by Q3 2027, which needs roughly 40 MW of further colocation and 10 MW of additional GPU capacity that is not yet contracted.
• GPUs: a ~$35 million commitment to NVIDIA's next-generation Vera Rubin platform, targeted for Q1 2027, funded from cash. New York sites targeted for AI conversion from Q3–Q4 2027; North Carolina for 75 MW in 2029 and 75 MW in 2030.

Our read: The contracted part of the plan — roughly $110 million a year from Cerebras once both phases run — is real paper, and the company has the cash to finish Phase 1 without new equity. The risks are timing and financing: Phase 2 needs debt that isn't signed, and the step from ~$140 million contracted to a $250–300 million run-rate depends on customers that don't exist yet. The GPU rental business also looks thin on its own numbers: the SubQ contract works out to about $9.8 million a year, against roughly $30 million of GPUs that the company's policy depreciates over at least three years (about $10 million a year) before power and staff costs. Q3 (10-Q due around mid-November) should show the first full quarter of GPU revenue; the number that matters more is whether Phase 1 in Alabama starts billing on schedule in December. Expect more share issuance in the meantime — the S-3 shelf allows up to $175 million of share sales.